KUALA LUMPUR: Poh Kong Holdings Bhd expects gold prices to be on an uptrend next year to reach between US$1,600 and US$1,700 per ounce compared with US$1,500 per ounce on average this year.
Executive chairman and group managing director Datuk Choon Yee Seiong said the group was optimistic that demand for gold related products would remain resilient, as global uncertainties would encourage consumers to change their investment portfolio from equities to gold.
“There are many uncertainties now, so gold is seen as a safe haven. Of course, higher prices are also good for us,“ he told reporters after the jewellery retailer’s annual general meeting here yesterday.
Over a one-year period, gold price increased from an average year low of US$1,199.98 per
ounce on Nov 9, 2018, to a high of US$1,552 per ounce on Nov 8, 2019.
He said there was still room for an upside in gold prices considering the highest it had ever reached was US$1,900 per ounce in 2011.
To mitigate the fluctuation in gold prices, he said, Poh Kong had put in place effective cost-control initiatives, improved stock turn, accurate and timely analysis to enable the management to make good business decisions, and constant monitoring on expenses to reduce overheads.
For the financial year ended July 31, 2019, Poh Kong’s revenue was flat at RM1 billion while net profit rose to RM25.27 million from RM23.40 million in the previous year.
Going forward, Choon said the group anticipated to maintain its revenue for the 2020 financial year, supported by higher demand in gold, while weaker consumer sentiment was expected to limit its gains.
“Considering the economic situation, we feel that consumer sentiment is weak and they are cautious in their spending,” he said.
On expansion plans, he said Poh Kong expected to set up either one or two new outlets for 2020, with capital expenditure allocated per outlet at between RM3 million and RM5 million. Poh Kong currently has 94 outlets.
Meanwhile, Poh Kong is also ramping up on its digital initiative by expanding its online channels which currently consist of Lazada, PrestoMall, Shopee and Superbuy.
“By the first half of next year, we are looking at starting our own online platform which will be Poh Kong’s direct online channel,” he added. – Bernama
